Most of what we’ve been writing about Unemployment Insurance in the past 18 months has centered around misguided proposals or legislative inaction that have made it more difficult for laid-off workers to receive benefits as they look for work.

Today, however, there is some good news. The Senate Reforms, Restructuring and Reinventing Committee passed out a bill  introduced by Sen. Bruce Caswell (R-Hillsdale) that would institute a work-sharing program for Unemployment Insurance. Similar bills were introduced several months ago by Sen. Vincent Gregory and Rep. Jim Ananich, who are both Democrats and support the Caswell bill. Work sharing was part of Gov. Rick Snyder’s agenda for workforce development in Michigan, and the League published an op-ed in several Michigan newspapers  urging Michigan to adopt the program.

It’s not hard to see why the idea enjoys support across the political spectrum.

Work sharing, also called short-time compensation, provides an alternative to layoffs for businesses that need to reduce their payroll hours due to reduced demand for their products or services. It allows qualifying employers to reduce the payroll hours of a large pool of employees by 20-40% rather than eliminating some workers altogether. Each employee would be eligible for a proportional percentage of the UI benefits he or she would receive if laid off entirely.

Workers benefit from work sharing because they will have less disruption in their household income than if they were laid off. While UI benefits never replace 100% of lost wages, the wage loss is lower for workers with reduced payroll hours than for those with no payroll hours at all. For some workers, it will mean not getting laid off. For others, it will mean “sharing the sacrifice” through a reduced income so that their coworkers will not be laid off. Workers also benefit because it means they can keep health insurance and other benefits, an important part of minimizing the disruptions to their household economic security.

Employers benefit from work sharing because it enables them to keep their skilled workers rather than having to search for, hire and train new workers when business improves. This reduces unpredictability, administrative costs and training costs.  It can also help maintain positive morale in the workplace, as workers are likely to prefer spreading the sacrifice around rather than fearing the loss of their jobs entirely.

We’ll keep you posted on how this proposal fares in the legislative process.

– Peter Ruark

The link between poverty and the economy is often ignored.  The poor are often categorized as the “other” and blamed for their financial condition. 

Poverty, however, is a deficiency that makes our economy incomplete, as spelled out in the new report Ties that Bind: Poverty and Michigan’s Economic Recovery.  Without addressing the condition of poverty and understanding the effect it has on the state economy, it will be difficult for Michigan to recover from the recession.

Poverty means there is less disposable income so consumer spending is reduced and businesses are forced to lay off workers or shut down entirely. This means less revenue for the state as incomes decrease and the tax base shrinks.

Public structures that help children and families also work to stabilize incomes and consumer spending and speed up economic recovery. With 16.8 percent of Michiganians living in poverty, programs such as cash assistance, food assistance, unemployment insurance and homelessness prevention can help provide the temporary relief needed by so many families in Michigan as well as bolster the economy so that it can grow and thrive.

While it is easy to look at those living in poverty as the “other”, 58 percent of Americans between ages 20 and 75 will experience at least one year of poverty during their life and few have been immune to the economic downturn. The number of Michigan households making less than $25,000 a year has grown by 17.5 percent while those making over $100,000 or more a year have declined by 16.1 percent.

Children have been especially harmed. In 2010, 23.5 percent of the children in Michigan lived in poverty. One of the most alarming statistics is the increase in child homelessness, which grew by 40 percent between the 2009–2010 school year and the current school year. 

It is unfathomable, but more than 31,000 children in Michigan are homeless and more than 700,000 are on food assistance. 

Though quality education is the No. 1 predictor of future success for kids, deep cuts are being made to education and assistance programs that will only further hurt Michigan’s children. Investing in Michigan’s children is investing in Michigan’s future workforce and helps build a citizenry and state that is economically secure.

Policies that seek to undermine programs that keep families stable and people spending money into the economy will only slow the state’s recovery.

 Recent policy decisions reducing access to cash assistance and food assistance should be reviewed. The state Earned Income Tax Credit should be returned to 20 percent of the federal EITC. The Legislature should reverse its decision to reduce unemployment benefits from 26 weeks to 20 weeks. Investments in skilled job training and financial supports while workers become ready for employment should be a priority for the state.

In order for Michigan’s economy to recover, investments must be made in the people of the state. An economy that works for everyone will help build a competitive and productive workforce, increase consumer spending and support local businesses. For Michigan to be truly competitive in the future, it must have the people and infrastructure that will attract investment in the state.

Michigan’s financial future will be greater if we build an economy designed to make sure all people in the state are able to maintain stability and economic balance.  Michigan’s economy must work for everyone, and not just those at the top of the income scale.

– Melissa K. Smith

One would think a blogger who writes about adult learning and Unemployment Insurance would be enthusiastic about a federal proposal that addresses both. However, what the U.S. House passed Tuesday night was less than thrilling.

It would be nice to report that Michigan’s own Congressman Dave Camp sponsored a bill that makes it easier for unemployed workers without a high school diploma to acquire that credential along with postsecondary training in order to reduce their chances of becoming unemployed in the future.  Nope. Congressional Republicans decided that the best way to help unemployed workers who never finished high school is (drum roll here)…bar them from receiving any unemployment benefits.

Take a deep breath and let’s count the ways that this policy proposal is misguided.

• It punishes people who never finished high school or got a GED, regardless of the reason or their circumstances. Individuals who made that decision years ago, worked hard at a job (or started a business), earned enough to qualify for unemployment benefits and then find themselves unemployed would not be able to access this safety net to provide for their families or prevent foreclosures on their homes.

• It operates on the assumption that skills deficits and other characteristics of workers are driving the unemployment problem, when in fact unemployment is caused by a lack of available jobs.

• It makes assumptions about who is likely to be unemployed and for how long. In fact, as we reported in our Labor Day Report this year, while workers without a high school diploma were more likely to be unemployed than those who completed high school, such unemployed were less likely than those at any other educational level to remain unemployed for more than half a year.

• It doesn’t have a clear purpose. Is barring workers without a high school diploma or GED intended to encourage them to go back to school and acquire one? If so, there are no provisions in the bill to help with that. Is the goal to reduce the cost of Unemployment Insurance by attacking those most likely to need it? If so, it will not make a big difference, since workers without a diploma who earn low wages usually cannot qualify for benefits anyway.

• Finally, it creates a terrible precedent by introducing eligibility standards on the federal level that have nothing to do with the hours or weeks of employment or wages earned prior to losing one’s job. No other federal eligibility requirement is based on personal characteristics of a worker that have nothing to do with the worker’s employment.

In a worst-case scenario, such a policy could encourage employers to favor applicants without a high school diploma over those that possess one, and could even create a perverse incentive for employers to encourage high school dropout. Along with stigmatizing a population that many states are trying to help, this policy could work directly against workforce development efforts.

The proposal is, in a word, pointless.

– Peter Ruark

On Thursday we heard Gov. Rick Snyder outline his workforce development agenda for the state of Michigan. He said several things that sparked our interest here at the League, mostly positive.

Without outlining any policy positions, the governor stressed the need to address factors that contribute to what he termed “structural unemployment,” which is generally understood as unemployment resulting from the mismatch of the demands of the labor market and the ability of workers to meet those demands. Normally this is attributed to lack of needed skills on the part of workers, but the governor  –  in addition to this — also cited child care and transportation barriers. We have for many years urged the state to make a serious effort to address these barriers as well as skills deficits among low-wage workers.

Gov. Snyder also mentioned “tying workforce development funds to meaningful workforce measures” through a data-sharing system. As we have written before, data is power; we cannot adequately measure how well programs are working without collecting and aggregating meaningful data with which to measure success. We hope the governor intends the system to collect data on the persistence and success of students who go through basic skills programs (such as adult education and community colleges remedial/developmental education) in addition to data on occupational training programs that lead directly to employment. (See the paper The Key Ingredient: Data is Crucial to Building Michigan’s Workforce System.)

One solid policy change proposal in the speech was to end the current Michigan Works! Agency policy that jobseekers seek services from only the one-stop centers in their designated Michigan Works! region. This sometimes creates difficulty for individuals who live closer to a center outside their region. The  governor urged a new policy requiring every Michigan Works! Agency door to be open to every eligible person who seeks assistance.

We applaud the governor for supporting work sharing in his address. In a recent Unemployment Insurance paper we published, Falling Short: Michigan’s Unemployment Insurance Compares Poorly with Other Midwestern States, we recommended that Michigan implement a work-sharing program that would enable qualifying employers in difficult circumstances to avert layoffs by spreading the pain more broadly but not as deeply — reducing the hours of many employees and making up the wage difference with UI benefits instead of laying off a few employees entirely. There is a bill currently in the House that would create a work-sharing program (House Bill 4516), and the governor included this in his plan.

We do wish Gov. Snyder had called for restoring the six weeks of UI benefits that the Legislature cut earlier this year, however. Unemployment may have gone down slightly in recent months, but Michigan still has a long way to go and his support for raising the maximum weeks of state-funded benefits back up to 26 would go a long way toward enabling it to happen.

– Peter Ruark

December 5th, 2011 Posted to Blog: Factually Speaking,Workforce Development | Comments (1)

For nearly two years, we’ve been blogging about the various policies governing Michigan’s Unemployment Insurance system and their effects on the unemployed workers who need the benefits as they look for work.

Some of the blog entries have focused on federal legislation, such as the game of chicken that Congress played more than once by renewing benefit extensions at the last minute before expiration. Others, however, have been about ill-advised decisions by the Michigan Legislature during the past year: 1) cutting the maximum number of state-funded UI weeks from 26 to 20, and 2) letting $139 million in federal dollars for the state UI trust fund float by rather than make modernizations that would expand UI eligibility to cover more workers.

To our list of questionable state policies, we can add keeping the maximum benefit at a flat $362 per week instead of pegging it to the average wage, and maintaining high earnings requirements for eligibility that prevent low-wage workers from accessing benefits.

Such state policies have resulted in Michigan being last in the Midwest on four indicators of worker-friendly UI systems, according to a new paper by the League. Of eight Midwestern states, Michigan pays the lowest maximum benefit (leading to a comparatively low average weekly benefit), has the lowest level of UI coverage (making Michigan workers the least likely in the Midwest to qualify for UI), spends the least amount per unemployed worker, and allows the fewest weeks of state-funded benefits. All this while its unemployment rate is highest among the Midwestern states.

The paper recommends that the Michigan Legislature reverse its new law cutting state benefits to 20 weeks and refrain from passing further UI legislation that is anti-worker. It also recommends making the maximum benefit a percentage of the state average weekly wage rather than keeping it at a flat rate, and adjusting the earnings requirements so that more low-wage workers can be eligible.

Finally, the paper encourages Michigan to implement the modernizations that would expand eligibility, even though the federal money is no longer available. It also encourages Michigan to explore the idea of adopting a work-sharing program, in which qualifying businesses could arrange with the state to cut hours of many employees rather than laying off a few, and have UI make up a portion of the lost wages.

Michigan is not going to be out of this economic hole anytime soon, and in the meantime it would do well to strengthen its worker safety net to at least be on par with its Midwestern neighbors.

– Peter Ruark

Here we go again. Congress is once more balking at extending the lifeline to unemployed workers and their families as they look for work.

In Michigan, inaction by Congress would mean 66,700 unemployed workers would lose access to Unemployment Insurance benefits, according to a new paper by the National Employment Law Project called Hanging On By a Thread.

Normally, states only offer their unemployed workers Basic UI, which is funded by the state and federal taxes collected from employers. In most states, Basic UI is available for up to 26 weeks; however, Michigan’s Legislature, displaying insensitivity to the very real economic hardship in this state, cut that maximum down to 20 weeks.

In states in which the unemployment level is especially high, states can provide Extended Benefits for 13 or 20 weeks (depending on the level of unemployment) to workers who have exhausted their Basic UI, with the cost split between the federal government and the state. The 2009 American Recovery and Reinvestment Act, however, incentivized qualifying states to offer Extended Benefits by making them entirely federally funded.

In July 2008, the federal government responded to the extraordinarily high unemployment rate by offering what is call Emergency Unemployment Compensation (EUC), which is also entirely federally funded. EUC offers 34-53 additional weeks of UI benefits, in four tiers, to states with very high unemployment rates. Because Michigan had a very high unemployment rate, long-term unemployed workers in this state could collect the maximum number of benefits from both Extended Benefits and EUC, in addition to Basic UI — a total of 99 weeks for workers who, despite looking for work for nearly two years, could still not find employment.

All of the federally funded EB and EUC benefits are set to expire at the end of the year if Congress does nothing.

In that case, in Michigan, 20,800 long-term unemployed workers will face an immediate cutoff from their Extended Benefits, an additional 26,100 workers will lose their EUC benefits after they complete their current tier, and 19,800 workers will only be allowed to complete their 20 weeks of Basic UI.

As the paper points out, never in the history of the UI program has the federal government let federally funded unemployment benefits expire when the unemployment level is so high. This certainly is not what Michigan needs now.

There is a petition that you can sign to let Congress know unemployed workers need them to renew the federal UI benefits now.

– Peter Ruark

It has not been an easy year for workers in Michigan.

The unemployment rate remains among the highest in the country. At 10.9 percent in July, it is the third highest. We can take some consolation in the fact that the rate has improved from 13.1 percent a year ago, when it was second-highest, and from 14.2 percent two years ago, when it led the nation.

But before we uncork the champagne (or whatever people drink at Labor Day picnics), we should be aware that 50 percent of unemployed workers in Michigan in 2010 were unemployed long-term (meaning more than 26 consecutive weeks).  According to the League’s 2011 Labor Day Report (pdf), this share is higher than it was during any of the previous economic downturns—even the bad old days of 1982-1983, when the unemployment rate reached a jaw-dropping 15.5 percent.

There is also a disturbing racial disparity noted in the report: While the unemployment rate went down between 2009 to 2010 for white and Hispanic workers and for Michigan’s workforce as a whole, it rose sharply for African American workers. In 2010, 24 percent of African American workers—nearly one out of four—were unemployed, and the unemployed in four Detroit-area cities with African American majorities (Detroit, Highland Park, Pontiac and Inkster) accounted for 16 percent of all unemployed workers in Michigan. 

The higher African American unemployment rate, while cause for great concern, is not surprising. Many African Americans live in concentrated urban areas where job seekers far outnumber the available jobs. In the Detroit area, there is insufficient public transportation from high-unemployment areas to the communities in which jobs may be available.

Educational levels among this population are also often a barrier to employment. In both good times and bad, people with low levels of education (those without a high school diploma or who have only a diploma and nothing more) have a higher rate of unemployment than those with some level of postsecondary training. As can be expected, the higher the level of one’s education, the less likely to be unemployed.

It is also true that communities with low levels of education are not as attractive to employers. It turns into a vicious cycle in which communities that are already disadvantaged in the labor market become more disadvantaged when the economy is bad.

Building occupational skills among Michigan’s low-skilled workers will not make all the jobs come back. We know that. But it will provide them with increased clout in the labor market and increase their likelihood of obtaining secure employment with a livable wage.

Building the occupational skills of low-skilled adults, and providing adult education to those not yet ready to participate in occupational training, is one way to help soften the effects of economic downturns on workers and make low-skilled communities—both rural and urban—more attractive to employers. That’s something for Michigan’s leaders to consider as they strategize on ways to get Michigan working again.

– Peter Ruark

Last week marked the culmination of the Michigan Legislature’s ongoing decision to do nothing and leave $138.7 million in federal funds on the table. That money was to be used to shore up Michigan’s Unemployment Insurance trust fund.

As the League discussed in a recent blog, the state had three years to make certain modernizations to its program to become eligible for the funds. Although the House passed legislation enabling these modernizations in 2009, neither the current House nor Senate took up a similar bill sponsored by Rep. Jim Ananich, D-Flint, before last week’s deadline.

As a new paper by the National Employment Law Project explains, the fund has borrowed $3.2 billion to finance state benefit payments, and owes a federal interest payment of $117 million at the end of September 2011. Receiving the federal money would not have solved the problem by any means, but it would have been a start.

The paper traces much of the problem to several UI tax cuts for businesses since the early 1990s, most taking place when the economy was strong. Because of the resulting structural imbalance, when unemployment rises, benefit payments exceed trust fund revenues as is to be expected, but there are not adequate reserves to prevent the fund from becoming depleted. The state then must borrow from the federal government to keep the UI benefits coming to unemployed workers.

Earlier this year, Michigan, in response to the trust fund debt, lowered the maximum number of weeks that an unemployed worker can receive Basic UI from 26 weeks to 20 — something that had not been done by any other state up to that point. The NELP paper shows how this and other cuts to worker benefits will hurt workers, local economies and businesses without solving the insolvency problem. It concludes that the only way to get a handle on the trust fund insolvency is to raise revenues through increased UI taxes on employers.

We sometimes hear that raising taxes is a ”jobs killer.”  Not true!  One must consider the consequences of Michigan going further in debt, or of an increased number of workers not receiving the temporary benefits they need while they look for work. NELP lays out a convincing case for why the past two decades’ UI tax cuts during good times were misguided, and why the revenue loss needs to be stemmed by increasing the taxes to workable levels.

It’s an argument the Legislature would do well to at least consider.

– Peter Ruark

Michigan’s House and Senate seem determined to leave $139 million in federal dollars on the table rather than help more unemployed workers receive temporary benefits as they look for work.

That is the amount of money that Michigan will receive to shore up its Unemployment Insurance trust fund if it undertakes at least two modernizations that expand eligibility for benefits. Legislation introduced by Rep. Jim Ananich would make two of the changes that would enable Michigan to qualify for the money. There is plenty of support for the bill, but it is stalled in committee.

The Legislature has had more than two years to act on this, and the deadline of Aug. 22 is approaching quickly. That’s 10 weeks from now, but the Legislature will break for summer vacation at the end of June.

Here is how it works: the federal Unemployment Insurance Modernization Act  offers states the incentive payment if states undertake certain reforms that make it easier for unemployed workers to receive benefits. Michigan has already adopted one change known as the Alternative Base Period, enabling the state to receive one-third of the total available payment ($69.4 million).

To receive the other $139 million, Michigan needs to adopt at least two of the four modernizations:

1) Make benefits available to unemployed workers who worked part time and are looking for only part-time work (27 states do this).
2) Make additional weeks of benefits available to permanently laid-off workers participating in relevant occupational training (12 states do this).
3) Make benefits available to workers who voluntarily leave their jobs for a “compelling family reason,” the definition of which must include:
• Following a spouse who has moved to a job in another location (24 states do this)
• Because of domestic violence (30 states and the District of Columbia do this)
• Caring for sick or disabled family members (21 states do this)
4) Pay an additional weekly child or dependent allowance of at least $15 as part of a Unemployment Insurance check (six states do this).

The Ananich bill (HB 4166) would enact 1 and 2 above. In addition to helping more Michigan workers and their families, these changes would be good for Michigan’s businesses, since workers tend to spend a large amount of their benefits at local businesses such as supermarkets and clothing retailers.

Michigan is behind the curve on this, as 33 states have already made the changes necessary to receive full funding. It makes no sense to drag our feet on this and let the deadline pass.

Michigan legislators, it is urgent that you pass the Ananich bills or craft and pass other bills that will enable our state to receive this money. And please do this by the end of June before you break for summer, so that Michigan can make the deadline.

For more information, please see the resource page of the National Employment Law Project.

– Peter Ruark 

Wider Opportunities for Women (WOW) held their first annual national partner summit last week in Washington D.C. As a partner, the League was invited to participate and I was able to attend.

The event brought together 44 partners representing 38 statewide organizations advocating for women and girls. One of the highlights was the release of the Basic Economic Securities Table Initiative (BEST report), a measure for economic self-sufficiency.

The report serves as a benchmark on what individuals and families need to earn to not merely survive but to reach and maintain economic stability. According to the BEST report, most low-wage jobs fail to help families meet basic needs including housing, food, utilities, transportation, and child care.

The unemployment rate may be dropping, but working families in Michigan still can’t make ends meet with the job opportunities scantily provided. The report goes beyond basic self-sufficiency to indicate how much a family needs to earn and save in order to begin to accumulate assets. Reaching economic self-sufficiency is what families need to make ends meet but accumulating assets is how families get ahead.

The BEST report states that a single parent with two young children needs to earn an annual income of $57,756, or just over $27 an hour, to meet basic needs and save, and a family with two working parents and two young children needs to earn $67,920 a year, or about $16 an hour per worker.

Michigan’s overall poverty rate in 2009 was at 16.2 percent, with 11.6 percent of families and 22.1 percent of children living in poverty. That means that a family of four living below the poverty line (earning about $22,000 a year or less) earns less than a third of what they need to be economically self-sufficient.

With a minimum wage of $7.40 an hour, new proposed limits to the Family Independence Program (cash assistance), and an upcoming six-week reduction in state-paid unemployment benefits, we are making it harder for families to reach economic stability. By providing a safety net and living wage jobs, we give families the ability to invest back into the local economy and their future.

After being saturated with the news of impending budget cuts across the safety net, WOW partners left the summit with a new tool and with that came some hope. The BEST report provides a benchmark for economic stability and a guide for policymakers to ensure a future of economic viability and prosperity for the state’s most vulnerable families and children. The message is simple: We need to not only provide jobs, we need to provide jobs that provide economic self-sufficiency.

– Anika Fassia

April 7th, 2011 Posted to Blog: Factually Speaking,Events,Human Services,Workforce Development | Comments (1)